The Kenya Revenue Authority has maintained an upward trajectory in revenue collection, marking a remarkable 6.7% growth in the financial year 2022/2023, when revenue collection stood at KShs.2.166 trillion.
Over the past five years, the revenue collection by KRA has shown a progressive increase, highlighting the effectiveness of the authority’s strategies and initiatives. The substantial growth in revenue collection for the financial year 2022/2023 reflects the positive impact of these efforts.
“The revenue performance reflects the prevailing economic indicators, especially the projected GDP growth of 5.8 percent in FY 2022/23 (Budget Policy Statement 2023) compared to a growth of 6.5 percent in FY 2021/22”, the acting Commissioner General, Rispah Simiyu, says in a statement Thursday.
KRA, the government agency responsible for tax administration in Kenya, plays a pivotal role in mobilizing resources for national development. The 6.7% growth in revenue collection demonstrates the successful implementation of measures aimed at enhancing tax compliance and expanding the tax base.
Performance of key Tax Heads
In a statement released on its website, it is shown that the excise duty collected from the betting industry has witnessed a remarkable surge, growing by 30% and reaching an impressive figure of KShs 6.640 billion.
“The performance is attributed to the integration of the betting companies into the KRA tax system. The integration has streamlined tax remittance from the sector and scaled up revenue collection,” Ms Simiyu says.
The agency linked its systems with those of betting companies in October last year, allowing enhanced visibility of revenue generated by the firms as well as real-time tax collection.
The domestic Value Added Tax (VAT) for the period reached KShs 272.452 billion, reflecting a growth rate of 11.3% compared to the previous period.
The amount collected in corporation tax reached an impressive KShs 263.819 billion, reflecting a remarkable increase of 9.0% compared to the previous year.
Kenya’s Pay As You Earn (PAYE) revenue experienced significant growth, reaching a total of KShs 494.979 billion.
The revenue from domestic excise duties has increased to KShs 68.124 billion, representing a growth rate of 2.8% compared to the previous year.
The import duty for the period amounted to KShs 129.987 billion, indicating a significant growth of 9.4% compared to the previous period.
Key Revenue Drivers
The positive growth in revenue collection can be attributed to several factors. Firstly, KRA has intensified its efforts to combat tax evasion and enforce tax laws, ensuring that individuals and businesses fulfill their tax obligations. The authority’s rigorous monitoring and enforcement actions have contributed significantly to increasing revenue collection. Also, the authority employed Customer Support Programmes, which included tax education and awareness, stakeholder engagements and roundtables, and customer visits to appreciate compliant taxpayers.
Furthermore, the taxation of the digital economy proved fruitful as the Kenya Revenue Authority (KRA) collected a total of KShs 5.328 billion from this sector, reflecting a growth of 207.9% compared to the same period in the financial year 2021/2022.
The Tax at Source program saw the implementation of initiatives such as eTIMS and integration of betting and gaming companies, contributing to revenue generation. Debt collection initiatives targeted non-compliant taxpayers, leading to enhanced revenue collection.
The implementation of a Dispute Resolution Framework, which included litigation, Alternative Dispute Resolution (ADR), and the Tax Appeals Tribunal (TAT), also contributed to revenue growth. Additionally, the leveraging of technology systems such as iCMS, iTax, RECTS, Smart Gates, Data Warehouse, and Business Intelligence further supported revenue generation efforts.
KRA has also reported strong tax base expansion as one of the reasons behind the performance of the financial year that ended in June 2022. The taxman says a total of 940,483 new taxpayers were onboarded into the bracket.
“The Tax Base Expansion Programme enabled KRA to collect Sh14.65 billion in revenue through initiatives such as recruitment of landlords under the Monthly Rental Income (MRI) obligation and the Block Management System (BMS) to map out potential taxpayers,” it says.
Additionally, the use of technology and digital platforms has played a crucial role in enhancing KRA’s revenue collection. The implementation of innovative systems and digital solutions has streamlined tax processes, making it easier for Taxpayers to comply and facilitating efficient revenue collection.
Domestic value added tax (VAT) grew by 12.7 percent to Sh272.45 billion. KRA says the transition to the Electronic Tax Invoice Management System (eTIMs) in February this year was instrumental in netting more revenues.
“It is important to note that VAT growth scaled up to 18.0 percent in February – June 2023 upon implementation of Tax Invoice Management System (TIMS & eTIMs), from an earlier slower growth of 6.7 percent in the first seven months of FY 2022/23,” Ms Simiyu said.
The Kenya Revenue Authority (KRA) has set ambitious targets for the current financial year, aiming to collect Sh2.768 trillion in tax revenue. This goal reflects the authority’s commitment to enhance revenue mobilization and ensure sustainable economic growth for the nation.
Furthermore, KRA has set its sights on surpassing the Sh3 trillion mark by the fiscal year 2024/25, demonstrating its determination to meet the evolving financial needs of Kenya and facilitate socio-economic development. With these targets in place, the KRA is poised to play a crucial role in generating revenue and fostering a thriving economic landscape in the coming years.
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